Builders Risk Insurance

Builders Risk Insurance

If you have a property policy and are considering building a new building you should consider obtaining a Builders Risk policy. During the course of construction, a building or other structure will be subject to the same loss exposures as those associated with a completed structure.

In some cases, however, an unfinished construction project will be more susceptible to physical damage. Loss associated with the elements (windstorm, rain, freezing rain, etc.) is an example of this increased susceptibility, as is the increased likelihood of collapse or earthquake damage to an incompletely supported structure.

Builders Risk Insurance, which is also known as course of construction insurance, covers materials, equipment, and the building, itself. Coverage is usually purchased either by the owner or the contractor. Because of the multitude of players in any given project, the policy will usually protect the property owner, the mortgage company, general contractor, and the subcontractors. The policy may even cover the engineers and the architects.

Property that is to become a part of the building may, at various stages of the construction, be located at a number of different places or be owned by different parties (the general contractor, subcontractors suppliers, the project owner, etc.). This should be insured as part of the construction project. Transporting these building materials and supplies to the construction site represents site represents an additional exposure not usually associated with a finished building.

A standard builders risk policy can be extended to include various options including:

  • Soft costs
  • Delayed opening
  • Testing and commissioning
  • Equipment breakdown
  • Coverage for existing structures on renovation projects

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